New TDS Rules: Section 194N Imposes Tax on Cash Withdrawals Over 1 Crore, Exemptions and Rates Detailed
Section 194N of the Income Tax Act, effective from September 1, 2019, mandates tax deduction at source (TDS) on cash payments exceeding 1 crore in a fiscal year by banks, cooperative societies, or post offices. The TDS rate is 2% for those who have filed income tax returns for the past three years and 5% for those who haven't, with different thresholds for cooperative societies. Exemptions include payments to government entities, certain banking correspondents, and authorized dealers, among others. Rule 37BA specifies the allocation of TDS credit to the account holder for the relevant assessment year.